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tv   Fast Money  CNBC  October 2, 2012 5:00pm-6:00pm EDT

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points. the nasdaq composite was up 6.5. that is because we had a turn around in apple. the nasdaq and s&p turned around. i will see you tomorrow in new york. good night. did you miss the 2012 rally? is it too late to buy now? >> like on a pendulum it is all about timing, timing, timing. >> who knows which dangers are waiting? >> do you wonder that another event that has shaken investor confidence can happen again? >> i don't worry about those things. i worry they can be worse. >> who knows who you may run into while trying to trade. >> went through four big ideas today. i'm just laughing because he just walked by me on the street. >> there are enough questions to frustrate the most seasoned investor. this is "fast money."
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>> live from the nasdaq market i'm melissa lee. october is the best month to own apple. will the trend continue? so far it has been a drag. among the reasons the usual suspect things like valuation on the new products and justify not being overweight the stock through the holiday season and into the new year. maybe investors are coming around. >> it was impressive today. now the stock rallied 19% into the launch. now the stock is down 6% post launch. i think that expectations have come back down. all the checks that we have done and read about kpkt that it is a supply issue, that the online stores are at 3 to 4 weeks and the apple store doesn't have the
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phone. i think we have to step back and put it into perspective and for investors that are longer term we are look to combine them. >> and i think the market is ahead of itself. the market is a leading indicator. that is why you see the performance in october because people are getting ready for the holiday season. you have the ipad speculatively coming out to be released in october. apple tv. you have a bunch of things that are catalysts. >> and for one million iphones it is 25 cents. >> we told you about it on the show before. it is a patent. after every launch the stock goes down. there is massive support at 640. >> did you step in and buy? >> we are all overweight.
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>> you're not overweight. >> television puts at least ten pounds on. >> once an apple bull and now maybe skeptic? >> there is no consumer product company or no company that is better set up than these guys. they introduced new nanos and touches and iphone 5. if you have the ipad mini it is a free for all. if you think about the technical set up and look at the the march and april period as we rally into the quarterly report that was going to be a very important one that was going to include a little bit of the new ipad the stock got ahead of itself. they released the device and people were disappointed. numbers started coming down like you will see for iphone 5 right now. the stock sold off after that period. about 13%. we are down about 6% after iphone 5. iphone numbers will continue to come down here. as we head into october 25 it is the q 4 report. that is the big one.
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do they sand bag it? we know the units will be soft. i think you see a new high on the stock at some point in the balance of the year but i think it could come in more. >> so the question right now, is apple reaching a point of slowing growth like microsoft and cisco and is map gate indicative of a larger fundamental issue in the company. it was a very popular piece. he joins us here at the nasdaq. good to see you in person. >> this is what every investor has to know. >> it is a turn around from where you stood before. before you thought it wasn't such a big deal. i think that is where most people had -- >> i made that mistake thinking it was just a blip and nobody would care. and then i look like a fool. it made me think and i started talking to a broader group of people who know this company and know the stock. what i found fascinating is where the story is going now.
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apple is a phone company. over 50% of the sales come from the phone. two-thirds of the profits come from the phone. what happens and this is what the smart people are asking, if the wireless carriers stop providing a premium in subsidy to apple which they have been doing all along for the iphone -- >> don't we ask that question every iphone and they do because they don't want to lose it. >> there is a difference because we are seeing a situation where we are narrowing the gap where people say you know when the iphone 5 s comes out will there be something big and new and exciting in it? so i think i think you have to start asking the questions in a more significant way. it is two quarters that people have been asking about the wireless carriers. now that is among the issues you have to talk about.
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>> it is not just verizon and at&t. it is the international carriers. the international carriers are going to continue to do the subsidies. at the end of this year to 100 countries up from 70. >> china mobile starting next year. >> all valid points. pricing power in this country which is a big part of the story, is pricing power starting to become vulnerable. i want to point something out. i write this piece today and i have written a lot of apple pieces. this one almost 0 hostile reaction. >> really? >> totally unexpected. i think that is because a lot of the apple fans and a lot of the investors realize that we are sort of an interesting inflection point for the company right now. doesn't mean it will not continue greatness but let me tell you something -- >> you are getting to a point
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where reception is reality. nothing more true than when you saw facebook. when you look at apple i want to be able to buy a samsung phone. i want to buy something other than apple. i'm caught in the ecosystem. we had a conversation where i said i want to get the samsung galaxy in october but maybe i am better off getting the ipad mini because everything else is apple related. so i think you are getting to a point where the retail audience is a little bit fed up with the whole ecosystem running their life. >> that is a great point. i bought a samsung series 9 laptop and i bought a galaxy 3 s. i hate both of them. my whole family is locked into this ecosystem and i wanted to like this stuff. to your point you made a great point -- the piece was great.
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remember this is a hardware company for the most part here and there has never been a hardware company in the history of the world and you have been covering these that hasn't seen these margins come in at some point. how is samsung going to compete? they are going to compete on price price. >> one of the other points is it is not a big enough difference. i am still on the iphone 4. now i am upgrading to the iphone 5. it is not a big enough difference. there is a bunch of issues. >> the financial question and that is how much of a discount to valuation would apple have to suffer if this were the case? if the iphone 5 margins are 55% right now that is what jeffreys is estimating according to their tear down, how much can they sacrifice in terms of the subsidy and make money and be valued? that is the question for investors. >> actually a better question or
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a very good question equal to that is if the subsidies were to end would the sunsumers pay the premium. people who love apple products would. on the margin people can get other types of phones that are considered pretty good phones and maybe not in the ecosystem. maybe they don't care about the ecosystem. maybe they realize i use my google mail and apple phone and use it all and it all ends up in the same place. i have it all working together and i think a lot of other people -- pricing does become an issue with everything at some point. >> everything is commodity at the end of the day. >> at the end of the day everything sort of is. >> thoughts on the desk. how concerned would you be if they lost the subsidy? >> i don't think that they will lose the subsidy near term and you have the global carrier system that is powerful. i think the stock trading at ten times x cash is very attractive
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for the growth that you are getting and product cycle you are getting and the ecosystem. >> they had 2 million preorders. people are still cueing up and twice as many as the first one. big movers in the wireless space. >> sprint took a drop today. causing the decline in the share price today. it was once the presumed suitor for metro pcs. as the research said in a note sprint left at the alter facing a moreng industry structure. metro pcs up nearly 18% on the day. >> what do you make of this rumor? it may not make sense when you take a look at the technology that each have. >> wasn't the issue we had originally? there was the issue with sprint and next tell and an issue when
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you looked at t mobile and sprint originally because it was gsm. you have the same issue. it is not like this could be done overnight. the real reason why sprint started to gain traction was dan hess saying they were going to return to profitability in 2014. i don't think it was totally about mna. when you see sprint come in you can gain traction back with sprint. i'm still long. i trim my position when we approach five. i would be a buyer again. it is interesting because we were talking about this earlier. the stock is up over 100% since the summer. a lot of that is predicated on the ceo talking about consolidation whether they were going to be a buyer or bought. there is very few people that can buy sprint right now. what i find interesting is that they have been caught offguard by this deal. everything they have been doing is to raise the currency and
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equity value so they can do a deal like this. now they are left at the alter. it is curious. >> they may benefit if the other two get together. what happened with sprint and nextel? that is what happened. seven years of losses and maybe that is what would happen with competitors. >> i think the tower companies are interesting here. crown castle in particular because they signed a $2.5 billion deal with t-mobile. they increased their tower by 33%. it is going to be earnings over time. there is not a lot of overlap at the company. so i think that is kind of interesting. >> so that is what people are chasing. coming up three retail names
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for 13 years fortune magazine has been bringing together women leaders. we have some of this year's highlights. what have you learned that will help you trade? >> there is a lot of really impressive women there. it is incredibly humbling. maybe next year you will come
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out with me. a lot of it is focused on digital media and how to survive. what i am interested in hearing is what are thoughts about the economies around the world. there seems to be concern about europe that while there is -- we heard from the secretary of treasury that the euro will hold together. i don't get a sense that people are feeling the european economy is anywhere near coming out of recession, that we may see a long prolonged i don't know it is recession or depression. it is up to the u.s. so that makes us want to look at primarily u.s. companies. there was one counter intuitive thing i learned that apparently the move to the paperless office is endangering the forest. now they are not useful to be sold for paper but other things that will destroy theforest. i thought that was interesting.
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it was very counter intative. >> taking the trees down and selling it for lands or other uses. >> she was urging me to use paper. that was funny. >> you pulled out a pad and started writing. >> i really wouldn't have expected that. i think there is -- >> do you think that is why bernanke is printing all this money? trying to save the trees. >> this is the nexus of the world thinking. now we know. >> could you get a read at all on china and any thoughts there? >> i think there is a fear that china is slowing and i think certainly we heard a lot about the fear of luxury growth slowing there. and that seems to be although there is a lot of luxury items
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here among the ladies in the crowd but i think the perception is the growth that we have had is definitely slowing. it is up to the u.s. to pull us out. >> we will leave it there for now. we will see you later on in the show. joining us from a beautiful beach location. retail stocks lagging. some sectors are fairing worst than others. the consumer discretionary sector has dropped. what does this tell us about the consumer trade? is it, in fact, running out of steam? joining us is senior equity analyst. is this a move thapt you had anticipated going into the announcement of qe 3? >> i don't know. i mean, retail stocks is still up over 20% year to date. so it's pretty significantly outperformed the broader market. it has been more recent. i think some of the weakness reflects concerns about the
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september sales numbers which will be reported on thursday morning. we had a really good august across much of retail, a good back to school season but it looks like business slowed in september and retailers are up against very difficult comparisons in september. there is anxiety about elections. >> tj max, ross stores. if you were to connect the dots you would see the budget conscious consumer may be spending. >> the numbers have been very good. tjx and ross has been reporting same store sales growth north of 6%, 7%. both companies had a pretty good september. dsw has been in a real sweet spot with the consumer. consumers are focused on value
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and brands. the other characteristic that is common to those three companies is they have flexible business models. the consumer environment has been choppy and they can respond quickly to that. >> if you like family dollar can you speak to the margin as they sell more lower end products how do they recover and compare and contrast that to dollar general which has margin upside? >> well, they are selling more food and other consumables. they have been adding additional items into the store. it has put pressure on gross margin. they are using that strategy to drive traffic. that brings customers in day in and day out. they do have the lowest margin in the dollar store sector around 7.5%. dollar general is north of 10%. i think that is the real
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opportunity for family dollar. they can do things to offset the pressure. they can do more private label. they can do more global sourcing and manage the store better, as well. >> going to leave it there. thanks for your time. what is your retail trade? >> i probably stick with target or kohl's store. if you look at the fiscal cliff. there is a $610 billion impact. 400 billion comes right out of consumer pocket. if you have less money i get the trade but stick with the low end stuff so maybe a wal-mart or target or something like that. >> today i bought a put spread on the xly looking out to november. i think a lot of these will disappoint over the next month. there was a massive trade in the staples today. somebody bought the jan 38 calls for 15 cents. 250,000 times.
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it is a massive trade. someone is making a bet that this breaks to all-time highs. >> basically you are saying discretion will continue to decline. >> somebody took a low delta and did not commit a ton of premium option but the totality is a big trade. >> some of the names are getting expensive. any kind of disappointment is going to go down and put a short on ross today. >> the consumer being tapped out and high unemployment and that brings me right to dollar general and maybe family dollar. i have questions about execution but family dollar is most comparable to wal-mart in terms of competitiveness. coming up next from an energy name left in the cold to a home builder piling on the gains. if you agree with bill gross that uncle sam has a habit what is the trade? [ male announcer ] for the saver, and a big first step.
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said the u.s. is an addict who pleasures itself with budgetary crystal meth. if we don't address the issue bonds will be burned to a crisp and stocks singed. should investors seek safety in gold? let's ask dennis. >> good to be here in sunny virginia beach this afternoon. >> rainy times square here. in terms of gold you have been a fan of gold for a while. do you think bill gross has the gone off the deep end or a little extreme in his metaphor? >> i think that was the most painful series of metaphors i have seen in a very long period of time. bill is a brilliant bond trader and made billions of dollars in trades.
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i am not a gold bug. i don't think the world is coming to an end but i think everyone needs to own gold but the trend has been from the lower left to upper right for a long time. gold is just another currency. it is doing well in other currency terms. we saw gold make a new high in euro terms and yen terms. it is getting close to making new highs in dollar terms. it is a great cross trade. >> i heard that we had an analyst on the afternoon show talk about the minors. i know you were involved in those spaces saying they have under performed and now will outperform. now the more and more read i'm long gdx. should i be long junior miner or gdx or any trade all of the above. >> i will let young guys trade
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the junior miners. those are places that old guys like myself have learned that is usually a bad trade. you can trade them. if i'm going to trade gold i'm going to trade gld or i'm going to trade the asas and big names. that is where i would rather be. what has happened over the course of the past five years gold stocks whether juniors or seniors seriously under perform gold itself. about three months i started to say if i am going to talk to retail but if i was be more aminable to owning gold stocks. i think gold stocks will probably overperform for the near time. i will stay away from the juniors. >> what about other commodities and the ag space and nat gas?
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>> in canada we are long nat gas and short crude oil. it is a tough trade because i hate to say the higher premium in the deferred futures. gn nat gas was at at a premium. i think being long of nat gas and short of crude makes sense. i will go with that trade. as far as ag is concerned everybody knew about the drought in the united states. grain prices got extremely extended on the upside. they are beginning to look rather weak. if you need to own one corn is the one to own. >> always good to see you. >> always good to be seen. thanks. >> have you seen much activity in the miners these days? >> as gold as risen so has interest in the miners and
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options trading. we have seen increasing amounts of calls trading. i agree with dennis on avoiding the junior gold miners. one of the problems with the seniors is typically the production cost of gold also rises when gold prices rise. i think that is one of the reasons why people are chronicily disappointed. they expect the names to be levered to the increase but they often are not because they either see production disappointments. time for pops and drops. we start with a drop for express. >> this stock got drilled lowest level since the ipo. they got is down for the second quarter in the row. they are talking about a slowness in sales in september. this one got drilled. >> pop for research in motion up 5%. >> the stock continues to climb a little bit higher after a very good quarter or at least better
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if you will. i think it can drift higher. i think very limited products, late products, a lot of competition. >> a pop today. >> this was in favor and out of favor. i think people are looking towards the election. if obama stays in the payout ratios are better for the group. i think you will see this return to in favor once again. >> pop for chesapeake energy. >> dennis was talking about natural gas. chesapeake is benefitting from that. >> drop for mosaic. >> they missed on earnings by about 15 cents. they are saying that demand for product in china is weak right now and they can probably hold off on buying there until the end of the year. >> jim has the ceo of mosaic on mad money. a pop for fly boarding. latest craze in australia.
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a jet ski hybrid. flyers are connected to a hose which uses water pressure. make sure you bring your wallet. they cost around $12,000 a piece. >> i love it. >> it look as lot smaller when he is on that. >> they take five inches off. drop for starbucks down 1%. >> this is another one not a cheap stock. a lot of future growth expected to come overseas in europe and asia. this is one that under performs the broad markets. i think a lot of people want to see after nike's results. >> drop for jc penney. >> ceo sounds like he is pushing out the recovery longer than expected which is not surprising given the challenges that they have. i think they are doing the right
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things in terms of the store and the store concept. it is one in the low 20s. >> pop here for citi group. >> i would stay away from it. i would go with high concentration of cit versus staying with the big bracket names. >> pop for coach. >> high end stores have popped on positive news. really benefitting from that. >> drop for radio shack down 13%. >> we ought to give dan a little bit of credit. we were talking about this name. he said stay away from it. but the story here remains dismal. the ceo left the company. and credit squeeze confirmed the under perform rating. this is a broken stock and broken story.
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>> and a pop for coconuts. a man recently smashed a record that would make any frat boy proud. the hard headed 40 year old busted open 18 coconuts gaining a place in the book of world records. back in 2011 he cracked 85 coconuts with his elbow in one minute. how do you practice that? >> amazing. >> it's a talent. >> everyone has one. >> confused about which companies to by. stephanie has the link you might be missing. stick around for that and we will dive deeper into the retail story with some of the biggest retailers out there and their properties up right after this. tdd#: 1-800-345-2550 this morning, i'm going to trade in hong kong. tdd#: 1-800-345-2550 after that, it's on to germany. tdd#: 1-800-345-2550 then tonight, i'm trading 9500 miles away in japan.
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kraft versus mondelez
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officials started trading. which company is keeping investors hungry? stephanie is breaking down the fundamentals. it looks like kraft has the edge. >> i like them both. the company is doing a very good job in terms of creating shareholder value. i think the mondelez piece is interesting. 75% of the businesses are in the fast growing segments like biscuits and gum and candy. 44% of the revenues are in emerging markets. 33% are in the bricks. if you believe in the global growth story this company will continue to benefit. the kraft piece, the north america piece is kind of a steady staple, almost a little boring packaged food company but you will get a 4.5% dividend yield and grow 7% to 8% a year. it is a little rich for me. >> what should it be? >> i think under 15 is more attractive.
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you are talking about mid single digit earnings growth. that sounds expensive whereas mondelez is 17 times and growing at a premium growth rate and you have an upside. >> i agree with stephanie. traditionally it is very, very well. there was a study that said 62% being very, very strong. it is better in terms of interest, stock option. it is exciting the startup again and make money and have an immact on it. >> earlier as you recall we discussed whether consumer trade is running out of steam. let's get an inside on someone who runs one of the oldest real estate trusts. welcome to the show. first of all i want to talk
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about qe 3 because that has helped a lot. can you outline the way of thinking about it and that is refinancing debt to lower interest rates and then also using that to go and acquire. how is it impacting you? >> it hasn't impacted us. from our perspective we look at a very long time prize and we look at real estate that will make money and create value. and so when you do that it really comes down much more to location of the particular real estate than the financing in any particular week or month. having said that i think we enjoy one of the lowest costs in the rate sector and a lot of different instruments and equity instruments are open to us. it hasn't gotten better or worse with qe 3. >> we talked to an analyst who pointed out that retailers are doing quite well. we talk about apple all the time. people are going to go to tj max or buy an apple product.
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is that where you are finding who is growing their foot print? >> what i mean by that is it is really the particular shopping center, the particular location that has to be all things to a particular community. and so restaurants in those first ranked suburbs really, really strong. i personally like those retailers that are embracing online technology and are effectively trying to grow their online businesses through bricks and mortar. that makes for a strong retailer of the future. that is what i'm excited about. >> business must be good because you look really relaxed. >> business is good. >> you have it unique gregraphically with 87 properties. where are you seeing strengths and weaknesses? >> we are basically in the coast. six major markets boston and d.c. northern california right now is on fire in terms of silicon
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valley where we have investments there. weaker in like an area like philadelphia which is i don't want to stay is weak but it's humming along. it is much more steady whereas silicon valley we see the upside. washington, d.c. which is struggling on the office side for obvious reasons i don't see it on the retail side. retail remains strong and i'm looking forward to a strong 2013. >> i want to bring in karen in this trade for a long time. you got a question for don? >> i do. we have seen over and over again companies talking about where they see their growth is in having smaller footprints and being able to deliver online and over and over again we see that they expect to decrease therapy rent expense with lower rent expense or a smaller foot print. >> there is so much to that
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question. it really comes down to where you are and the flexibility of your space. for example, in big box spaces to the extent that best buy wants to get smaller or do something else which is the example that everybody uses, that is tougher at times depending on where the market is because there are so many boxes that can take the space. when you get to smaller shop space or shopping centers with flexibility you can cut up boxes and provide more flexibility in the offering of different retailers including health clubs and theaters and restaurants and other soft goods users that are using online market to be able to reach the customers through the bricks and mortar. so it really very much depends upon the location of the real estate and the configuration of the boxes. in the suburbs which is where we concentrate this is a supply and
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demand business. right now demand exceeds supply. >> if you have apple as a tenant and you do are you able to command a much higher per square foot price for other tenants? >> we are not a mall company so any kind of retail other than malls is what federal realty is about. in maryland one of my favorite projects we have a great apple store. there is no doubt that once that apple store opened that it created traffic and created increase in head counts up and down the street that has allowed us to push rents around the block. >> great to have you with us. we hope to see you again soon. coming up next we will get to the bottom line in unusual activity. our traders are fast. how good are they at solving riddles? we are attacking some.
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higher than average daily volume after interest in general motors. you did see bullish activity in another auto name. >> ford which is down slightly because truck sales might have disappointed even though overall numbers were good. this is a very cheap short term bullish bet that the stock will be above $10. almost 20,000 of them traded. >> wasn't the only one making waves in congress with his market moving picks. acman wasn't as straightforward.
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he was on this morning. take a listen to what he had to say about his speech yesterday. >> first of all, i'm trying to get in his brain which is very difficult. >> for a small space, he's a big guy. >> exactly. i'm going to go with only because they have run up so much. a gun company. you know the two ones that i want to go with. >> it is coming from his point. i don't believe it would be good for america. i might be looking at one instance. >> of course, i don't think it would be good for america. but you never know.
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it could be a tobacco company and a casino company. maybe he was overboard with if it would be good if it goes out of business. >> i do too. >> pgix is too small for short. >> one would be a for profit education. >> what about dunkin donuts? >> i think there is a health problem here in terms of gdp. >> but america runs on it simon. >> i mean. stephanie. >> thoughts? >> the same thing would be tobacco, make some energy drinks. >> but those names come to mind. >> we have senators looking into the marketing practices.
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>> but i like karen's idea. but what about facebook? liking people and all of that. >> changing of status. >> next on fast, a penny for your thoughts. one of our traders has the trade of the day that is next. [ male announcer ] trading's like a high-speed train. and you don't want to miss it with thinkorswim by td ameritrade. you get knock-your-socks-off tools, simple one-click orders, real-time paper trading to hone your skills, plus anytime you need it support. ♪ stocks, options, futures, and forex. get your trading on track. thinkorswim by td ameritrade. trade commission free for 60 days, plus get up to $600 when you open an account.
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you tweet a question and our traders have the answer. >> let's get to the first tweet. how do you recommend we trade financials and specific bank of america citigroup based on the potential for litigation? in lew of today's lawsuit what do you guys say? >> if you look at litigation costs, whatever the number is when they sell off i wouldn't be a buyer going into the election, after the buyer, whatever the
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costs are going to be perceived to be, it would be after the election. >> trade of the day go ahead. >> netflix all week. we have one called coinstar. >> this has a lot of positive stuff going on wit. right now. kiosk and atm kiosks and it could be trading a lot higher. coinstar. >> we will be right back stay tuned. >> there is a wall street smauk down happening. i have an isight that could prove possible. stick around and see if you should buy in bulk. m "mad money" is come upg next. so, i'm happy. sales go up... i'm happy. it went out today... i'm happy. what if she's not home?
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it is time for the final trade. >> i would buy november puts. >> sprint. it is not about m and a. sprint letter s. >> coinstar. >> out auto

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